“I hate advertising,” Elon Musk tweeted in 2019.
Since he began pursuing his $44 billion buy of Twitter — and for years earlier than that — the world’s richest man has made clear that promoting was not a precedence. He has talked about creating wealth from Twitter by means of different means, like charging some customers to be on the location. He has additionally steered that he desires to loosen up the service’s content material moderation insurance policies, which entrepreneurs say have helped forestall advertisements from showing alongside hate speech and misinformation.
However as Mr. Musk will get able to take over Twitter, he might shortly uncover that Twitter wants Madison Avenue greater than the opposite approach round.
Adverts account for roughly 90 p.c of Twitter’s income. But lengthy earlier than Mr. Musk’s acquisition, many company leaders had been lukewarm about promoting on the service. They’ve cited a litany of complaints, together with that the corporate can not goal advertisements practically in addition to rivals like Fb, Google and Amazon.
Now, quite a few promoting executives say they’re keen to maneuver their cash elsewhere, particularly if Mr. Musk removes the safeguards that allowed Twitter to take away racist rants and conspiracy theories. An advertiser exodus would weaken the corporate, underscoring the issue of balancing Mr. Musk’s imaginative and prescient of Twitter as a haven totally free speech with the enterprise relationships that preserve it going.
However Twitter’s co-founder and no less than some buyers who joined Mr. Musk’s bid have rejected the necessity for promoting and insisted that the corporate wants to interrupt away from it. Twitter’s standing as “a public firm solely reliant on the promoting enterprise mannequin” added to its issues with bots, abuse and censorship, said Ben Horowitz, a common associate on the enterprise capital agency Andreessen Horowitz, which is investing $400 million within the effort to take Twitter personal.
Jack Dorsey, the corporate’s co-founder, agreed. “That is true. It wants cowl for some time,” Mr. Dorsey said in a tweet responding to Mr. Horowitz.
Advertisers mentioned such a shift would harm Twitter. “On the finish of the day, it’s not the manufacturers who should be involved as a result of they’ll simply spend their budgets elsewhere — it’s Twitter that must be involved,” mentioned David Jones, a longtime promoting government and the chief government of the Brandtech Group, a advertising and marketing know-how firm. “In case you mentioned to me that TikTok went away, that may be a catastrophe. However Twitter going away? Yeah, no matter.”
From Opinion: Elon Musk’s Twitter
Commentary by Occasions Opinion writers and columnists on the billionaire’s $44 billion deal to purchase Twitter.
Proper after Mr. Musk reached a deal to purchase Twitter early final week, the corporate’s executives started reaching out to promoting purchasers, in line with regulatory filings and several other individuals who obtained the messages. The executives emailed assurances that enterprise would proceed as ordinary and that the traces of communication would stay open. Model security, they mentioned, remained a “precedence.”
Twitter representatives have additionally famous that it could in all probability be months, if no more than a 12 months, earlier than any severe adjustments would go into impact, promoting executives mentioned.
On Wednesday night time, at Twitter’s annual NewFronts presentation for advertisers at Pier 17 in New York, firm representatives burdened Twitter’s worth for entrepreneurs: as a prime vacation spot for folks to collect and focus on main cultural moments like sporting occasions or the Met Gala, more and more by means of video posts. Presenters pledged to assist manufacturers attain fragmented audiences, and executives repeatedly thanked advertisers and companies for his or her belief and collaboration.
Mr. Musk’s pending acquisition, and what it’d imply for advertisers, went unmentioned through the quick presentation.
“It has been a quiet month at Twitter,” joked JP Maheu, Twitter’s vice chairman of worldwide consumer options.
Representatives for Mr. Musk didn’t reply to a request for remark about his plans for promoting at Twitter. Twitter declined to remark.
Twitter differs from Fb, whose tens of millions of small and midsize advertisers generate the majority of the corporate’s income and rely on its huge dimension and concentrating on talents to succeed in clients. Twitter’s clientele is closely weighted with massive, mainstream corporations, which are usually cautious of their advertisements showing alongside problematic content material.
Twitter earns the overwhelming majority of its advert income from model consciousness campaigns, whose effectiveness is far tougher to judge than advertisements that concentrate on customers based mostly on their pursuits or that push for a direct response, corresponding to clicking by means of to an internet site. The corporate has tried for years to make its platform a greater vacation spot for advertisements that generate measurable gross sales, and rebuilt its advert server in 2019 and 2020 to satisfy marketer calls for. In March, Twitter started permitting advertisers in the US so as to add buying catalogs that showcased top products for anybody visiting their profiles.
Twitter’s attain can be narrower than many rivals, with 229 million customers who see advertisements, in contrast with 830 million customers on LinkedIn and 1.96 billion each day customers on Fb. Stifel analysts wrote to purchasers not too long ago that Twitter was “nonetheless thought of a reasonably area of interest platform by many within the promoting business.”
Final month, Twitter mentioned its $1.2 billion in income through the first three months of the 12 months was up 16 p.c from a 12 months earlier, however nonetheless lagged the expansion fee the corporate had projected. Whereas it was worthwhile within the quarter, the corporate has misplaced cash in eight of the previous 10 years.
On the advert company Chemistry, whose purchasers embrace well being care corporations and nationwide restaurant chains, Twitter accounts for round 10 p.c of social media budgets, mentioned Jason Dille, who oversees media planning.
“Even the likes of LinkedIn have eclipsed the power for us to focus on shoppers past what Twitter is offering,” he mentioned. “We’re going to go the place the outcomes are, and with loads of our purchasers, we haven’t seen the efficiency on Twitter from an advert perspective that we have now with different platforms.”
However for Mr. Dille and lots of others, Twitter’s perspective towards content material controls was a shiny spot. In 2019, it banned all political advertisements. The corporate launched warning labels about misinformation associated to elections, took down falsehoods about vaccines and, after the Capitol riot final 12 months, completely banned former President Donald J. Trump. Final month, in response to the struggle in Ukraine, the platform stopped amplifying Russian authorities accounts and commenced blocking some tweets containing pictures of prisoners of struggle. Days earlier than the cope with Mr. Musk was introduced, Twitter mentioned it could ban ads that deny climate change.
How Elon Musk Purchased Twitter
A blockbuster deal. Elon Musk, the world’s wealthiest man, capped what appeared an inconceivable try by the famously mercurial billionaire to purchase Twitter for roughly $44 billion. Right here’s how the deal unfolded:
“Twitter’s performed a greater job than many platforms at constructing belief with advertisers — they’ve been extra progressive, extra responsive and extra humble about initiating methods to be taught,” mentioned Mark Learn, the chief government of WPP, one of many largest promoting corporations on the earth.
Now, many advertisers say that though they may wait to see what Mr. Musk does, they’re nervous {that a} decade of protecting scaffolding could also be dismantled.
“We are able to safely say that if the content material moderation insurance policies change, and if there is no such thing as a approach for us to guard the model, we’re undoubtedly going to advocate to our purchasers that they pull again on their investments,” mentioned Arun Kumar, the chief knowledge and know-how officer on the advert large IPG.
A number of promoting executives mentioned they doubted that Mr. Musk would contemplate their considerations due to his observe report with the business.
Mr. Musk, a founding father of the profitable electrical automobile firm Tesla and the rocket firm SpaceX, does little advertising and marketing for these companies. On Twitter, he has criticized advertisements as “manipulating public opinion” and mentioned his refusal to “pay famous people to fake endorse.” When writing in a since-deleted tweet about Twitter Blue, the not too long ago launched $3-a-month subscription service, he pushed for “no advertisements,” explaining that “the ability of companies to dictate coverage is drastically enhanced if Twitter will depend on promoting cash to outlive.”
“I don’t assume he cares concerning the promoting expertise on Twitter as a result of he’s by no means cared about promoting,” mentioned Harry Kargman, the chief government of the cellular promoting firm Kargo. “I don’t assume that he’s all about convincing advertisers to spend cash on the platform past what’s automated.”
Mr. Musk has steered that Twitter concentrate on subscriptions; others have steered a pay-per-tweet mannequin. However some advert executives hope that Mr. Musk’s aggressive spirit will encourage him to reset Twitter as a powerhouse advertising and marketing machine.
“There’s a fork within the street, the place Path A results in an unfiltered place with the worst of human conduct and no manufacturers wish to go wherever close to it,” mentioned Mr. Jones of Brandtech. “And Path B has one of many world’s genius entrepreneurs, who is aware of quite a bit about operating corporations, unleashing a wave of innovation that has folks trying again in a couple of years and saying, ‘Keep in mind when everybody was nervous about Musk coming in?’”
